The decentralized finance (DeFi) platform Blast has unveiled a stablecoin called USDB, currently valued at $405 million in the market. Blast operates as an experimental layer two (L2) network on Ethereum, offering native yield on specific crypto assets. USDB is Blast’s in-house stablecoin, provided to users when they transfer stablecoins like USDC, USDT, or DAI from the Ethereum mainnet to Blast's L2.

Currently, the USDB token contract has a total supply of 420.44 million, distributed among 196,979 addresses. The top 100 holders collectively own 82.93% (348,692,432.25) of the circulating USDB. USDB's popularity is attributed to its variable yield, similar to USDE. Essentially, USDB is a rebasing stablecoin pegged to the dollar, offering a variable yield derived from Makerdao’s on-chain T-Bill protocol.

The protocol adjusts its supply over time to reflect the yield earned from the T-Bill protocol. Blast enters the stablecoin market at a time when yield-bearing dollar-pegged crypto assets are highly sought after. For instance, Mountain Protocol’s USDM, backed by U.S. Treasuries, and Ethena’s USDE, a yield-bearing dollar derivative. Paxos International has also introduced USDL, a yield-bearing greenback crypto token.

While rebase mechanisms and yield-generating features present innovative approaches, the concentration of holdings in projects like USDB, USDE, and USDM could pose potential risks to market stability if they were to face setbacks. The crypto community remains vigilant, recalling past incidents such as Terra’s UST and the collapse of the 20% yield-bearing Anchor Protocol. As the crypto landscape evolves, the sustainability of such innovations will continue to be closely scrutinized.